Documents detail Fountain's assets

Posted on August 25, 2009

While court documents show Fountain Powerboat Industries has $3 in assets, Fountain Powerboats, Baja by Fountain and Fountain Dealers' Factory Superstore, list substantially more assets than their parent company.

North Carolina-based Fountain Powerboat Industries filed for Chapter 11 bankruptcy protection Monday in U.S. Bankruptcy Court in the Eastern District of North Carolina.

Fountain Powerboats lists nearly $18.4 million in assets, Baja by Fountain lists $3.7 million in assets and Fountain Dealers' Factory Superstore lists $3.2 million in assets.

Fountain Powerboat Industries' liabilities are listed as more than $19.6 million, which it owes to Regions Bank. The amounts are broken down as $13.2 million as a term loan to Fountain Powerboats; $4.3 million as floorplan to Fountain Dealer's Factory Superstore and $2 million as revolver to Fountain Powerboats.

Fountain Powerboats lists $50 million in liabilities. Creditors holding the 20 largest unsecured claims include GE Commercial Distribution Finance Corp., Key Bank and Textron.

Baja by Fountain lists $4 million in liabilities. Baja Marine Corp. is the only listed creditor holding a secured claim. Fountain Powerboats, under its Fountain by Baja subsidiary, borrowed $4 million from Baja Marine Corp., a former Brunswick subsidiary, to buy assets of the boat company.

No payment is due on the note until June 2020, and at that time the note will be cancelled by Brunswick, provided Fountain has not "defaulted on its obligations to the Brunswick Corp. on either of the two engine supply agreements."

Fountain Dealers' Factory Superstore lists nearly $5 million in liabilities, with Regions Bank listed as the only creditor holding a secured claim.

The company, in its filings, also is asking the court for permission to sell "substantially all" of its tangible and intangible assets, including the land and buildings it owns in North Carolina, all manufacturing equipment, all inventory, all contracts with customers and all records relating to the business.

The sale of these assets could bring in $6 million to $8 million or more, Fountain said.

"The debtors seek to consummate an asset sale promptly in order to maximize the value of sale assets for the benefit of creditors," Fountain said in court documents. "Although debtors intend to continue operations at a reduced level post-petition as a debtor-in-possession, such operations are not currently sufficient to support a traditional reorganization absent additional capital infusions and a corresponding increase in net revenues would be expected, but cannot be guaranteed."

Fountain added that a forced liquidation of the assets by a Chapter 7 trustee would result in no payments to unsecured creditors.

Past financial troubles

Fountain had been struggling financially, with a drop in earnings as boat sales fell.

In February, Fountain started trading on Pink Sheets under the symbol FPWB, after being notified its stock would be suspended from trading on NYSE Alternext US, the successor to the American Stock Exchange.

"In light of current economic conditions in general and, in particular, conditions within the marine industry, the company does not believe it can regain compliance with the Exchange's continued listing standards in the near term," Fountain stated at the time of the announcement.

In suspending Fountain, the exchange noted that the company had "sustained losses that were so substantial in relation to its overall operations or its existing financial resources, or its financial condition had become so impaired" that it was questionable whether the company would be able to continue operations.

According to data on Pink Sheets, Fountain's 52-week high and low are $1.72 and 4 cents respectively.

— Beth Rosenberg

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Comments

4 November, 08 2009, 07:05 PM

By Keith

Funny,

We as tax-payers help the crooks on Wall-Street, but the very thing our money should be going to is not! Small to medium size businesses are what drive this Country. When is someone going to wake up!!

3 September, 30 2009, 10:33 PM

By KEN BOWERS

As a boating enthusiast, Fountain Powerboats always represented the ultimate in boating. I could not afford one, a used Wellcraft Scarab the best I could do. I hate to see Reggie Fountain lose the business he is so pationate about. It's a crying shame that American owned companies are just falling by the wayside. I hope somebody buys this company and keeps it in tact. In the late 90's this company had more energy than anything I've ever seen. But also on a note, these boats where totally out of reach to a middle class working man. No small as in 23 ft. or so boat offerings. The cheapest being  in the 80K range. Reggie, if you read this, and I hope you recover, you can bring major performance in a small package 21-23 ft. at a cost someone can afford. I know it's not the market Fountain was intended for. In todays economy, people can live without a 230k boat. But hey, they may the only market out there. As a sales rep. of equipment the small equipment sales are non - existent. Only the 200k pieces. So what do I know.

2 September, 29 2009, 05:42 PM

By henry matheus

I am formerly a  marina owner/operator and small dealer of family/performance from 1982 to 1995

in the  lower NY/Hudson Valley area.

Given what I estimate to be the extremely soft demand for the real estate and tooling assets of the Fountain/Baja enterprise--- it would seem to have more value as a "package" & remaining in tact--rather than to break up the bits for sale at bargain basement prices so low as to reflect the veritable "non-market" of the moment.

The Baja / Fountain names and network, if able to generate even minimal income in the near-to-mid term future--- are surely worth more as a system.  The systemic synergy, no matter how low in absolute performance today---is surely worth more in even a moderate market turn around over the next 24-36 months.  Remember--this is a global product line---and it has innate "stiimuli" inherent in the Mercury engine distribution agreements.  Also on board is the market perception of good technology, positive attributes of perceived product value, quality & performance vs. price point--and brand longevity & recognition that is perhaps amongst the best in the industry.       The "parts and pieces" as assets  in no way can come close to that value of "the whole"in my opinion.

If the enterprise can be held together in any smaller form (by whatever means)--for future resumption as a "lean machine" with growth potential and the ability to leverage on all facets comprising past success--it will yield more over time as a re-emerging brand--than hastily  "trashing" it now.

As with many (small)  businesses these days ---you "just have to live till it turns around a bit".  As an entrepreneur, that's most always thought of as a happier ending (than business death) but sometimes it's just not possible.   Hopefully with the operator's access to capital as a result of all positives (and more) mentioned above--Fountain/Baja can remain on the corporate "injured reserve" list--and not be

"escorted to the morgue" like so much of American manufacturing.

 

 

.

 

1 August, 25 2009, 12:17 PM

By DJ In NC

The wording makes it sound as if complete liquidation is being contemplated? 

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